As the TACO restaurant wants maximum exposure for its Street Tacos, it should set a reasonable price with the sole purpose of getting maximum exposure and space for its Street Tacos in the given market demand for that product. It can happen when the demand for a given product is elastic and the reasonable price will lure the customers in great number to purchase it, resulting in increased revenue to the restaurant. Other reason of using penetration pricing strategy is the possibility of economies of scale. The reason of using this strategy could be the fear of competitors and a restaurant wants to go ahead with its first mover entry (Pricing Strategy 2010).
Penetration tactic is used for entering the generic market where competition is high; economies of scale are possible. It can decrease the demand of competitor restaurants’ Street Tacos. At the same time, the TACO restaurant will get another advantage from the penetration pricing by getting a ready market by inducing customers to try other menu items (Pricing Strategy 2010).
For the TACO restaurant it is more important to capture the maximum market share first and then introduce other tactics by offering unique features like no other restaurant is offering. It can add a touch of distinctness by not putting beans and rice sides on the tacos and charging the same rate, as other restaurants are charging. In stead of rice and bean sides, customers can order some more items on the menu, which could be a more satisfying experience. The TACO restaurant should at the same time offer its customers the choice of separately ordering bean and rice sides to the Street Tacos while not letting the price increase in comparison to other restaurants selling tacos with bean and rice sides. Those customers will be tempted to save some dollars who don’t want their Street Tacos with bean and rice sides. This is a sort of